Penalties and sanctions: civil sanctions - behavioural penalties
As well as reading this guidance, you should also be aware of the general guidance which is available in the Compliance Handbook regarding compliance checks, information powers and penalties for excise wrongdoing and failure to notify for other excise regimes.
In recognition that there will be occasions when a criminal sanction is not appropriate or proportionate, the AWRS law has also introduced equivalent breaches that would give rise to a civil penalty. These are:
- Carrying on a controlled activity without approval – for the remainder of this guidance this will be referred to as trading without approval or TWA
- Buying from an unapproved wholesaler
The AWRS behavioural penalties rely heavily on the existing model for behavioural penalties across other taxes which were introduced in Finance Act 2008, Schedule 41. This guidance may look very similar to guidance contained in the Compliance Handbook specifically in relation to failure to notify a relevant obligation and the VAT and excise wrongdoing penalties. However, although the guidance may be similar, if not identical in some areas, you must follow this guidance if you are issuing an AWRS behavioural penalty.
This technical policy guidance is owned by the Alcohol Policy Team in Indirect Tax. Sections which are common to the Schedule 41 penalties are owned by Tax Administration Advice (TAA); Central Policy, for example, the sections covering Special Reduction.
The imposition of an AWRS behavioural penalty does not restrict you issuing a Schedule 41 penalty at the same time where appropriate.
The legislation for behavioural penalties for trading without approval and buying from an unapproved wholesaler is in Alcoholic Liquor Duties Act 1979 Section 88H and Schedule 2B.
(Note – further guidance will be issued regarding the penalty/offence for buying from an unapproved wholesaler in due course - this came into effect on 1 April 2017)
Trading without approval (TWA) – the application window
The primary law introduces a new civil penalty for anyone carrying on a controlled activity without approval. For the sake of simplicity, we refer to this from now on as trading without approval (TWA). This comes into effect from 1 January 2016. The legislation provides for an application window of three months to allow existing businesses to apply. Any existing businesses who do not apply in the window will be considered to be trading without approval.
The window for applications will be 1 January 2016 – 31 March 2016. Existing wholesalers that miss this window may be liable to a penalty. Businesses who apply within the window can continue to trade until they receive HMRC’s decision, and must cease trading if they are found not to be fit and proper.
Businesses that are informed their application has been refused during the registration window but continue to trade without approval could also be subject to a penalty/guilty of an offence for trading without approval where appropriate.